European shares surge as Fed rate hike shows confidence in U.S. economy

LONDON Dec 17 (Reuters) - European shares surged in early
trading on Thursday after investors saw the U.S. Federal
Reserve's move to raise interest rates for the first time in
nearly a decade as a sign of confidence in the world's biggest
economy.

The pan-European FTSEurofirst 300 index was up 1.8 percent
at 1,441.51 points by 0804 GMT after climbing to a one-week
high, while Germany's DAX, France's CAC and
Britain's FTSE 100 rose 1.4 to 2.1 percent.

The Fed made clear that the 25-basis point rate hike was a
tentative beginning to a "gradual" tightening cycle, and that in
deciding its next move it would put a premium on monitoring
inflation, which remains mired below target.

"With the Fed out of the way and only a couple of trading
sessions left before Christmas, we could now see a traditional
end-year rally. The new year will once again prove to be quite
volatile as markets will start to anticipate the next rate
hike," Philippe Gijsels, head of research at BNP Paribas Fortis
Global Markets in Brussels, said.

The Fed's policy statement noted the "considerable
improvement" in the U.S. labor market, where the unemployment
rate has fallen to 5 percent. It also added that policymakers
were "reasonably confident" inflation will rise over the medium
term to the Fed's 2 percent objective.
(Reporting by Atul Prakash; Editing by Sudip Kar-Gupta)